Thursday, March 29, 2007

The Dark Side of Employment: Our Honorable Colleagues Will Abuse You!

Unfortunately too many of our colleagues will try to take advantage of you - you, the young physician, who is coming fresh out of residency. You may still be full of trust and full of respect towards you superiors, since your "superiors" just taught you everything that is the foundation for your career. But these colleagues, the ones offering you a position, are not those teachers anymore. These are physicians in private practice that run a business and want to make money. They know that you are not familiar with the economics of private practice. They know that you are not aware yet how to make money and how much each service you provide pays. They know that you are not familiar with what you are able to collect.
Unfortunately too many employers will try to take advantage of this and pay you a lot less than what you bring in.

The Miami area, where I interviewed a lot, seems to be a gathering ground for doctors who can't wait to take advantage of you.
There was that female doctor who straightforward told me that I could "easily collect 400K" in my first year in her practice, but that she could only pay me 125K! At the end of the year I would receive a bonus that brings me up to 35% of collections.
When I asked her why 35%, she answered: "I don't know, maybe because we are three doctors in the practice" - an answer that obviously is pure financial and economical non-sense and might have been meant as a distraction. The only correct answer would have been: "I have overhead costs of 55% and I also have decided to keep 10% of what you bring i. Therefore, you will keep 35% of your collections. And she is aclever business woman. An answer such as "Oh, I don't know" is unbeliveable from the getgo. And the best was still to come: When I left the office I walked past her partners Porsche and then past her shining new black Jaguar coupe with a license plate saying "Women mean business". I thought "how true" and told her I would have to think about taking her offer. She seemed not too happy with that answer and immediately told me that there were "two other candidates that are very interersted and I have to let them know by Monday". Another very transparent trick to pressure a candidate. I declined the job. The new candidate that took the job left a year later with her partner to open their own practice.

The list of stories about experienced physicians trying to take advantage of the newly graduated colleagues that I could tell her is embarrassingly long.

You have to know what you are getting into before accepting a job!

You have to get an idea how your potential employer truly feels about you! The crucial question to ask during an interview is: "Will I have access to the financial data about what I bill and collect each month?" and then, a little later during the interview: "Are you willing to put that in writing in the contract?" And also, later during the talks, and before signing the contract: "How much did your practice and how much did you collect last year?"

The answer to this question separates the honest employers from the ones that have something to hide. Why would you not give a future partner access to the books? That is the best way to teach your new associate the importance of coding, billing, purchasing and which procedures pay well and which not - something that may guide your decisions on what to market and what not.

There is nothing dirty about money, nothing private. There is nothing to hide, especially not when it comes to money that YOU make, money for services YOU provide. Unfortunately, many employers are not interested in that. They consider such knowledge secrets of success and prefer to keep it to themselves. Or maybe they are playing the "bait and switch" game, or maybe they want to take advantage of you as long as possible, they may want to keep on telling you how "expensive" everything is and how little they earn, just to keep your salary down.

Yes, an employer deserves a part of your earnings, but I believe you are entitled to know exactly how much. After all, you are colleagues, and in a good practice you are supposed to be trained to be a good businessman as well. And for that you need access to the books.

Don't be shy about asking! And I urge you to be extremely careful if you are not permitted access, no matter under what pretenses. Do not listen to the explanations, just remember the bottomline
- Will I have access to the financial data - Yes or NO?

I personally have no doubt whatsoever that any practice owner that does not give you access to the financial data also does not consider you his or her equal and does not see you as a future partner.

Also, I have learned to be very suspicious if your potential employer wants to do any of the following things listed below, they are all red flags:

·Withhold benefits for the first 6-9 months, such as 401K etc. That's plain cheap.

·Give only very limited benefits - one employer actually thought that benefits consisted of giving me "a pager" and, as reason why he did not even offer health insurance went on to tell me “I don’t have health insurance for myself, I only have it for my son” This happened in Miami too. The same practice owner told me he collected 1.3 million last year, but that he could only pay me 140K. Considering an overhead of 50% in a moderately well run practice, and calculating that I would have brought in 40% of the business in my first year, I would have collected 650K. Substract the 50% overhead from that figure and you come out with 325K as my share of profit. He wanted to pay me 140K. Where would the other 185K go? You have a choice: new apartment, boat, car, lawyer to sue me if I left, you name it.
This is why you should know what the financial situation of the practice is and how much you collect every month. I guarantee, it will be an eyeopener!

·Not give you insurance contracts, but bill your services under their own insurance contracts. Since you do not have your own insurance contracts, you stay dependent of the owner, since you are not able to separate from your employer’s practice and open your own practice unless you have insurance contracts. You ask if the insurance contracts will be in your name and in case they should not be in your name, politely ask to change this. Another similarly evil move is to cancel all your insurance contracts once the owner knows you are going to leave the practice.

·Make you sign contracts that do not allow you to practice within a certain number of miles from the office after you leave (restrictive covenant, which is illegal in a number of states, including MA). Watch out for the number of miles on these limitations and negotiate the number of miles. Make sure that you could practice at the next, closest hospital. Do not accept a restrictive covenant it if this would force you to move 15 miles or more away. Consult an attorney if these restricted covenants can be or are usually upheld in court.

Witholding financial information is a huge red flag! Every practice owner knows with absolute precision how much he or she collected last year, how much the overhead was, how much the profit was. If he or she decides to withhold that information it usually works to your disadvantage. You are not supposed to know how much he or she makes, so that he can pay you less! This usually means that the owner makes a lot more than you think. Should you not own your salary you can be guaranteed he would share THAT with you immediately.

·Give you a contract that asks for you to pay money back if you leave. A Framingham, MA, hospital used to offer such contract and consequently had a lot of difficulties finding doctors. Never ever sign such a contract! You incur a financial risk if you do not like the job for whatever reason, even if it has nothing to do with you.

Try to make you assume a financial risk for the practice, such as putting up a collateral for a loan or cosigning a loan for the practice. That is the responsibilities of the partners! That is what partners do, they take the risk and are rewarded for taking the risk. This is not the responsibility of an employee!

Beware of doctors who want you to take over the unpleasant work, so that he or she can kick back while earning the same or more. They may say, “I have done it for so long, now it is somebody else’s turn”. One woman offered me a “position” where I would work two evenings at which time I would also take the following two night calls, and this for half the usual beginner’s salary. The idea was that one of the two women did not want to do any more night calls and just wanted to coast along doing regular day office hours only. How convenient for her...

Beware of colleagues who want you to take more night call than they are willing to do. This may soon turn into even more night call for you and none for them - all the while they make all the money from the 2 AM deliveries.

Some practice owners try not to come through with the partnership promise at the time it was planned for – usually 2-3 years. They may delay partnership talks. They may always be "too busy" to sit down with you to talk about it and continue to make excuses. The goal is to keep you on salary, since this is to their great benefit. Young physicians often are baited with future improvements such as higher earning, participation in profit, partnership, and better benefits. Unfortunately it often changes once you are working in the practice. You may never get a chance to talk to the senior partners, or they may always seem very busy or they may brush you off with “everything has gotten so much more expensive” “the reimbursements have gone down” “let’s talk about it next month, next year…”. And then they never offer you the promised improvements or – worse – they just fire you before the benefits arrive or before the partnership talks come.

This is known as the “Bait and switch”.

Make sure your contract contains written explicit detailed information about the promised improvements in unmistakable wording. Have this reviewed by your lawyer. Should the employer hesitate to do this, you may rightfully suspect that he or she wants to take advantage of you.

These are all things that I have learned from my very own personal experience and from what I have heard from immediate friends and colleagues. To assure you that this is not made up, that this is not my personal bias and to reassure you that I am not paranoid, I am including a section of an AMA publication that speaks about this issue.

Regretfully abuse and being misled is a common experience of young physicians. Here is a copy of the "Young Physicians Section" of the AMA that has been published on the AMA website, "Contracts, What You Need to Know" It contains quotes, stories and advice from young colleagues:

Beginning of quote:·Talk with other physicians who have been in the group, hospital, or the practice. Ask, "Why do they need me?" Get the inside story--ask about the practice's reputation, its competitive situation, the market for physicians. Decide if your personality is a good fit. If there has been a high turnover rate, find out why.

·After more than three years of working with him, he "was not ready" to make me his partner even though I was performing 80% of the work and receiving 20% of the income.

·I learned from my fellow employee physicians that partnership negotiations had been going on for over five years.

·My section chief had a nurse telephone all patients prior to setting the appointment; she took a history and asked for information as to insurance status. Naturally, the chief selected only those patients with a high probability of demanding surgery that also had good insurance; I got the leftovers.

·After working as it were my own practice and doing well over fifty percent of the work, I asked for specifics about the transition to partnership. I suspected that our practice was generating more income than I was led to believe. I presented my estimates of our income and asked to see the "books." I was told it was none of my business and that I would have to accept what I was given as my "half." The next thing I knew, I received my 90-day termination notice.

·Each contract I reviewed was different; however, they all protected the group or senior partner. Each was presented as a "take it" or "leave it" proposition.

·I became a "partner" but the only income that was shared by all partners was the profit from the department, which contracts with the hospital. However, the rest of the partners keep 100% of the profit from their own practices. How is that for a fair agreement?

·When I arrived at my hospital, I found many surprises. There was no written contract with regard to my position; I had originally inquired about a contract but was informed that physicians were not given contracts at this institution. Then I discovered that the salary I was quoted was actually a loan, which I was expected to repay. Then I discovered I had to pay all of my routine expenses, including malpractice premiums, out of my own pocket. I also had been told that I could do my own billing, but when I arrived I was informed that the wife of my section chief would do the billing for 7% of my fees. Furthermore, I was informed that I was expected to pay a secretary additional money under-the-table each month.

·The most important thing a young physician can do is to assess the practice style, honesty, and ethical standards of the individuals he or she is considering a partnership with.

·Specific terms were not outlined in the initial three-year independent contractor arrangement. I asked that it be included, and I was made to feel I was being not trusting.

·Don't let a shiny brochure fool you into thinking the contractor knows what it's doing. A plan needs to be run well and offer you adequate support, or it can become a nightmare.

·He kept postponing signing the final contract. Finally, when it was presented to me for my signature, the buy-in agreement was missing. He said he needed clarification from his attorney. I didn't want to make any waves, since I had a lot to lose. Two months later, he said the practice wasn't doing well, and I had to leave. I was also told I had to look elsewhere to practice since our agreement had a non-compete clause.

· I made all the mistakes that the College of American Pathologists professional guidelines warned not to do. I failed to discuss the position with a previous employee of the group. If I had contacted this doctor, I would have discovered that the group never had any intention to make any employees partners.

·If you have questions that were not answered in a straightforward manner, do not take the job. We live in an era where the hiring doctor should do his homework, have a clear idea of the job description of the prospective new doctor, and know all of the proposed benefits. Any practice that has failed to plan for the new doctor is a potential nightmare for the junior partner.

·I knew there were some drawbacks. The first year salary was considerably lower (30-40% lower) than other salary offers I received in the city; but the future income potential, as a partner would more than compensate. The partners were making four times the starting salary of their employee. The other major drawback was that it was essentially five years to full partnership. Toward the end of the first year of employment, the group would vote to add an additional partnership track contract which consisted of an additional four years of service with yearly salary raises, higher bonuses and equal voting privileges. Two weeks before my employment contract was to expire, they told me there were insufficient votes to offer me a partnership contract. What they then offered was a second year of employment without any future job security. As I reflect back, I don't believe they ever had any intention of making me or any other future employee a full partner. Their goal was to form a limited partnership where only a few made high salaries. I believe they purposely delayed their decision to essentially force me to work another year for them.

·In the presence of a third person, he verbally promised me I'd become a partner at the end of the first year if I were comfortable. The contract stated however that the partnership would be agreed upon prior to the termination of the three-year contract, with the details to be determined at that time.

·Contracts should state a maximum number of hours. He told me he could order me to work 200 hours a week if he so desired. I worked all public holidays. He took four weeks vacation during which time I was on call all the time. I was told I would be compensated for this extra work. He promised a bonus at the end of the first year. Just prior to the end of my first year, I asked about the bonus and partnership. He said, "What bonus? What partnership?"

· He had the office manager and other staff eavesdrops on my conversation with my patients and their families. If you notice that your conversation with a secretary is immediately interrupted as soon as the senior doctor walks into the room, watch out!

·Academic physicians sharing part-time jobs in the Veterans Administration or federal system need to beware of problems with benefits. Often, the VA does not offer a contract until the first day of work. This can be a problem for physicians who were hired by the associated medical school, only after committing to a move to find themselves in the VA personnel office, with the VA giving very different information than did the department chair. The government has mysterious ways and rules often unknown to departments. Insist on everything in writing, including commitment to reimburse for moving expenses! The VA also has problems with pensions. A doctor working part-time at the VA can find himself without a vested university pension, because of requirements about a certain minimal number of hours worked at the university each year.

·The pension plan was structured with entry dates such that I did not qualify for my first year of participation until after I had been with them for 16 months. They terminated me after my first year and told me I didn't qualify for their plan so they didn't have to make a pension entitlement.

·I had several concerns, which no one would address. I finally sent a certified letter asking that I receive a response to my concerns. I received a return letter stating I should plan to meet with them the day before my contract expired. At the meeting, with their attorney present (I was without counsel on the advice of several good attorney friends), they demanded my pager, cellular phone and told me to vacate the office within the hour. I was given a termination letter which did not state any reason whatsoever for the termination. I later found out they had done the same thing to another physician a few years earlier.

·Read the fine print in your contract. Hire an attorney to review the contract. And, don't trust anybody: The people I went into practice with were my professors in medical school. After five years, I left the group with hard feelings on both sides.

·Don't be dazzled by a generous salary. The practice I joined was an old, established group with a dwindling reputation. They wanted fresh blood to come in and save them. Basically, the young, hard-working guys supported the older guys.

·If it sounds to good to be probably is."

Last updated: Dec 08, 2004, The preceding content provided by: Young Physicians Section, Copyright 1995-2006, American Medical Association.

End of quote

Shocking what our estimated and respected colleagues can do! Watch out, and keep your eyes open. You have been warned!

Your Matthias Muenzer, MD

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